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Brazilian policymakers continue to grapple with how to restrict the use of welfare funds for online betting, amid broader societal concerns over banking privacy.
In the latest policy development on the issue, the president of the National Institute of Social Security (INSS) announced earlier this month that he was investigating banning the use of Brazil’s Continuous Benefit Payment (BPC) for gambling.
The BPC is paid to people with disabilities and low-income seniors and is worth one Brazilian monthly wage, or R$1,518 (US$257).
The INSS president, Alessandro Stefanutto, told Estadão that the purpose of the BPC “is to alleviate poverty. If it is used for sports betting, we either grant the wrong benefit, because the person is not poor, or there is a misuse of the resource.”
He said that he would ask the Central Bank of Brazil to conduct a study to determine exactly how much in BPC funds go towards betting.
The central bank, however, is singing a different tune. Citing an unnamed source at the bank, O Globo reported that it would be hard to discern how much of BPC is spent on gambling due to banking secrecy regulations.
Rafael Marchetti Marcondes, chief legal officer and Brazil-licensed operator Rei do Pitaco and legal director for the Brazilian Institute for Responsible Gaming (IBJR), told Vixio GamblingCompliance that these conversations “involve a sort of state philosophy, if the state has the right to control personal expenditure or not”.
“So the government gives you some money and due to this fact does the government have the right to decide how you are going to spend this money, yes or no? This is a political position that has been causing some friction here in Brazil.”
The controversy caused the Brazilian government to issue emergency legislation this month to clarify an earlier regulation regarding the use of payment platforms.
The regulation had set new rules which came into effect at the start of the year, specifying that virtual banks would report monthly financial transactions above R$5,000 (US$845) by individuals and above R$15,000 (US$2,534) by companies.
The move caused furor, and false information spread that transactions made via Pix and other payments platforms would now be subject to tax.
Although the transactions are not being taxed, Marchetti Marcondes did point out that many people, particularly those who receive social benefits, may not report all income streams to the government. Keeping track of all transactions on Pix and other transactions may lead to taxes on an individual who did not report all their income.
The emergency legislation of January 16 clarified that Pix and other platforms will not be subject to transaction fees and taxes. “It ensures that Pix is not taxed and reinforces the Central Bank's authority to preserve the public digital infrastructure and the privacy of transactions,” the order read in part.
Last year, widespread reports into the use of funds from Brazil’s Bolsa Família welfare programme for gambling ultimately prompted the Federal Supreme Court to rule that the government take “immediate measures” to stop welfare funds from ending up in gambling accounts.
Earlier this month, Gabriel Galípolo, the new president of the central bank, pledged his commitment to working with Brazil’s Federal Court of Auditors (TCU) when it comes to providing information on Pix payments for gambling made by Bolsa Família recipients.
However, the Supreme Court order has since been appealed by the office of Brazil’s solicitor general, seeking additional clarification around how it should be implemented.
Udo Seckelmann, a Brazilian gambling law expert at Bichara e Motta in Rio de Janeiro, said it would be “technically difficult to restrict bets from being placed using money from social programs, as (players) would have to identify in their bank accounts what amounts are received from social programs and which are earned from other sources of income”.
